2100 employees will be laid off right before Christmas. Central Freight Lines is the largest trucking company to close since Celadon ceased operations in 2019.
Waco, Texas-based Central Freight Lines has notified drivers, employees and customers that the less-than-truckload carrier plans to wind down operations on Monday after 96 years, the company’s president told FreightWaves on Saturday.
“It’s just horrible,” said CFL President Bruce Kalem.
A source close to CFL told FreightWaves that CFL had “too much debt and too many unpaid bills” to continue operating, despite exploring all available options to keep its doors open.
“Years of operating losses and struggles for many years sapped our liquidity and we had no other place to go at this point,” Kalem told FreightWaves. “Nobody is going to make money on this closing, nobody.”
Central Freight will cease picking up new shipments effective Monday and expects to deliver substantially all freight in its system by Dec. 20, according to a company statement.
A source familiar with the company said he is unsure whether CFL will file Chapter 7 or “liquidate outside of bankruptcy,” but that the LTL carrier has no plans to reorganize.
The company reshuffled its executive team nearly a year ago in an effort to stay afloat, including adding the company’s owner, Jerry Moyes, as CFL’s interim president and chief executive officer. Moyes remained CEO after Kalem was elevated to president in July.
“I think it was surprising that there wasn’t a buyer for the entire company, but buyers were interested in certain pieces but not in the whole thing,” the source, who didn’t want to be identified, told FreightWaves. “Part of it could have been that just the network was so expansive that there was too much overlap with some of the buyers that they didn’t need locations or employees in the places where they already had strong operations.”
Third-party logistics provider GlobalTranz notified its customers that it had removed CFL as “a blanket and CSP carrier option immediately, to prevent any new bookings,” multiple sources told FreightWaves on Saturday.
CFL, which has over 2,100 employees, including 1,325 drivers, and 1,600 power units, is in discussions with “key customers and vendors and expects sufficient liquidity to complete deliveries over the next week in an orderly manner,” a CFL spokesperson said. Approximately 820 employees are based at the company headquarters in Waco.
Despite diligent efforts, CFL “was unable to gain commitments to fund ongoing operations, find a buyer of the entire business or fund a Chapter 11 reorganization,” another source familiar with the company told FreightWaves.
Kalem said the company had 65 terminals prior to its decision to shutter operations.
FreightWaves received a tip from a source nearly two weeks ago that CFL wasn’t renewing its East Coast terminal leases but was unable to confirm the information with CFL executives.
Another source told FreightWaves that some of the LTL carrier’s West Coast terminals had been sold recently, but that no reason was given for the transactions.
At that time, Kalem said the company was “working to find alternatives” and couldn’t speak because of non-disclosure agreements. He said executives at CFL, including Moyes, were trying to do everything to “save the company.”
“Jerry [Moyes] pumped a lot of money into the company, but it just wasn’t enough,” Kalem said.
Kalem said he’s aware that a large carrier is interested in hiring many of CFL’s drivers but isn’t able to name names at this point.
“Central Freight is in negotiations to sell a substantial portion of its equipment,” the company said in a statement. “Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area.”
As of late Saturday night, Kalem said fuel cards are working and drivers will be paid for freight they’ve hauled for the LTL carrier until all freight is delivered by the Dec. 20 target date.
“I’m going to work feverishly with the time I have left to get these good people jobs — I owe it to them,” Kalem told FreightWaves. “We are going to pay our drivers — that’s why we had to close it like we’re doing now. We are going to deliver all of the freight that’s in our system by next week and we believe we can do that.”
During the outset of the pandemic, Central Freight Lines was one of four trucking-related companies that received the maximum award of $10 million through the U.S. Small Business Administration’s Paycheck Protection Program (PPP). This occurred around the time that CFL drivers and employees were forced to take pay cuts, a move that didn’t go down well with drivers.
“It all went to payroll,” Kalem said about the PPP funds. “Yes, our employees and drivers did take a pay cut over the past few years, and we gave most of it back, even raised pay over the past several months but it just wasn’t enough to attract drivers.”
FreightWaves staffers Todd Maiden, Timothy Dooner and JP Hampstead contributed to this report.
FreightWaves CEO and Founder Craig Fuller reacts to the Central Freight Lines news:
“With Central struggling for many years and unable to reach profitability, it makes sense that they would want to liquidate while equipment and real-estate are fetching record prices.”
Central Freight Lines statement
Here is the statement given by Central Freight Lines to FreightWaves late Saturday after reports surfaced of its impending closure:
“We make this announcement with a heavy heart and extreme regret that the Company cannot continue after nearly 100 years in operation. We would like to thank our outstanding workforce for persevering and for professionally completing the wind-down while supporting each other. Additionally, we thank our customers, vendors, equipment providers, and other stakeholders for their loyalty and support.
“The Company explored all available options to keep operations going. However, operating losses sapped all remaining sources of liquidity, and the Company’s liabilities far exceed its assets, all of which are subject to liens in favor of multiple creditors. Despite diligent efforts, the Company was unable to gain commitments to fund ongoing operations, find a buyer of the entire business, or fund a Chapter 11 reorganization. Given its limited remaining resources, the Company concluded that the best alternative was a safe and orderly wind-down. As we complete the wind-down process, our primary goal will be to offer the smoothest possible transition for all stakeholders while maximizing the amount available to apply toward the Company’s obligations.
“Central Freight is in negotiations to sell a substantial portion of its equipment. Additionally, Central Freight is coordinating with other regional LTL carriers to afford its employees opportunities to apply for other LTL jobs in their area. Discussions are ongoing and no purchase of assets or offer of employment is guaranteed.”
Brief history of Central Freight Lines
|1925||Founded in Waco, Texas, by Woody Callan Sr.|
|1927||Institutes regular routes in Texas between Dallas, Fort Worth and Austin.|
|1938||Dallas facility opens as world’s largest freight facility.|
|1991||Receives 48-state interstate operating authority, expands into Oklahoma.|
|1993||Joins Roadway Regional Group and begins service in Louisiana.|
|1994||Expands into Colorado, Kansas, Missouri, Illinois and Mississippi.|
|1995||Consolidation of Central, Coles, Spartan and Viking Freight Systems into Viking Freight, Inc., is announced. Central’s Waco corporate HQ starts closure.|
|1996||Becomes the Southwestern Division of Viking Freight, Inc.|
|1997||Investment group led by senior Central management purchases assets of former CFL from Viking Freight and reopens as a new Central Freight Lines.|
|1999||Expands into California and Nevada.|
|2009||CFL Network provides service to Idaho, Utah, Minnesota and Wisconsin.|
|2013||Acquires Circle Delivery of Tennessee.|
|2014||Acquires DTI, a Georgia LTL carrier.|
|2017||Acquires Wilson; new division created with an increase of 80 terminals.|
|2020||Wins Carrier of the Year from GlobalTranz.|
Acquires Volunteer Express, Inc. of Dresden, Tennessee